IRDA norms for new life schemes

Insurance regulator IRDA on Tuesday said that all universal life products, a new kind of insurance which entered India recently and gives greater flexibility to customers, will not have any unit-linked component in them.
IRDA also said that from now, all such products will be named variable insurance products (VIPs) and have a lock-in period of at least three years.
The regulator prescribed that all VIPs should provide death benefits equal to the guaranteed sum assured plus the balance in the policy account while the maturity benefit should equal the balance in the policy account together with a terminal bonus, if any, as applicable. It also said that the sum assured under these policies should be at least ten times the annual premium.
As of now no group insurance is allowed by IRDA to operate under these policies. Single premium or limited premium structures are also not be allowed for VIPs.
Specifiying on the cost structure, IRDA said that the maximum expense, including commission, should not be more than 27.5% of the premium, while for the second and the third year, this will be capped at 7.5%. From the fourth year onward, the expense is capped at 5%. The regulator also said that the minimum policy and premium payment term shall be five years.